Should You Buy Smith & Nephew PLC (ADR) (SNN)?

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As industrywide interest jumped, some big names have been driving this bullishness. Blue Jay Capital Management, led by Paul Sinclair, created the largest position in Smith & Nephew plc (ADR) (NYSE:SNN). Blue Jay Capital Management had $10.7 million invested in the company at the end of the quarter. Krishen Sud’s Sivik Global Healthcare also made a $2.5 million investment in the stock during the quarter. The only other fund with a brand new SNN position is David Costen Haley’s HBK Investments.

Let’s go over hedge fund activity in other stocks similar to Smith & Nephew plc (ADR) (NYSE:SNN). We will take a look at CenturyLink, Inc. (NYSE:CTL), Genuine Parts Company (NYSE:GPC), Mohawk Industries, Inc. (NYSE:MHK), and Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA). This group of stocks’ market caps are closest to SNN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CTL 29 395238 1
GPC 23 347677 1
MHK 49 2485166 2
ULTA 40 2044715 4

As you can see these stocks had an average of 35.25 hedge funds with bullish positions and the average amount invested in these stocks was $1318 million. That figure was $233 million in SNN’s case. Mohawk Industries, Inc. (NYSE:MHK) is the most popular stock in this table. On the other hand Genuine Parts Company (NYSE:GPC) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Smith & Nephew plc (ADR) (NYSE:SNN) is even less popular than GPC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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Disclosure: None




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